Re: Elegance and Liberation in the GT

["James K. Galbraith" <lpgc403@xxxxxxxxxxxxxxxxxxx>]

Reply to Paul Davidson:


"A Marshallian variant of the classical analysis"? If by this you mean a
supply-and-demand analysis in which "labor" and "capital" markets establish
an employment equilibrium and an interest rate, respectively, then we have
utterly different interpretations of the General Theory. I read Keynes as
having explicitly rejected those markets, rejecting the supply curve for
labor in Chapter Two and the classical capital market in the chapter on
Liquidity Preference. Instead, you have an inter-linked macroeconomy, in
which the classical dichotomy is abolished, and Malthus's Principle of
Effective Demand put back at the center of things.


In my view, therefore, Keynes's struggle to escape was entirely genuine, and
also largely successful. That is what I mean by liberation. Elegance is a
course a matter of prose.
****

James Galbraith
The University of Texas at Austin
LPGC403@xxxxxxxxxxxxxxxxxxx
fax (512) 471-1835